Restrictions eased but obstacles still a bitter pill for foreign hospitals

Foreign companies began investing in China’s healthcare sector in the 1980s, and in 1997 the former Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and the Ministry of Health introduced the Supplementary Provisions on the Establishment of Foreign-invested Medical Institutions, which specified that foreign-invested medical institutions could only take the form of Sino-foreign equity or a cooperative joint venture, in which the Chinese party should hold an equity ratio of no less than 50% in general, or no less than 30% under special circumstances.

In July 2000, the Ministry of Health and the former MOFTEC jointly published the Interim Measures Governing Sino-foreign Equity and Cooperative Joint Venture Medical Institutions, which set out the conditions, requirements, standards, management approval authority and procedures for the establishment of these medical institutions, as well as their standards of practice. Under the interim measures, foreign ownership restrictions were eased (a foreign company’s share of the equity ratio or interest could reach up to 70%).

However, Article 35 of the interim measures expressly provided that “an application for the establishment of a wholly foreign-owned medical institution in China shall not be approved”.

Ada Zhang is an associate at Martin Hu & Partners (MHP Law Firm)